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Ending "Pay to Play" on Government Contracts

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The Problem:

Just as corporate lobbying corrupts the legislative process, the scramble for government contracts corrupts the executive branch and its agencies. Ohio has been a focal point of this corruption in the last year, as campaign contributors illicitly received legal contracts by the attorney general's office, no-bid contracts from the secretary of state's office, and control of workers comp investments in the notorious Coingate scandal. Similar scandals have enveloped New Jersey, New York, California and other states' politicians across the country. Increasing this "pay to play" problem in recent decades has been the wave of privatizations of public services that has handed work previously done by the government itself to private businesses plying officials with political contributions�creating an environment ripe for corruption. The result has been not just inflated costs from companies bilking the taxpayer, but a degradation of services.

• For example, Texas turned management of its human services call centers over to the corporate consulting firm, Accenture, in a controversial $1 billion private contract, only to see repeated delays.
• Kentucky has run into similar charges of corruption in its bidding system for private companies to manage its Medicaid system.

One outcome of this privatization corruption, as a federal Government Accountability Office report detailed recently, is that 43 out of 50 states now offshore jobs administering at least one federal aid program. It's a cruel irony that a majority of states are sending jobs overseas to run food stamps, family assistance and unemployment insurance programs�in many cases no doubt on behalf of state residents previously employed by the state before the corporate contractors took over.

Best Practices to Stop "Pay to Play" on Government Contracts:

Banning Campaign Contributions by Contractors: Connecticut, West Virginia, South Carolina, and Illinois have all passed laws that bar companies bidding on contracts from making campaign contributions to government officials, although New Jersey has passed the most far-reaching "pay to play" law in the wake of local contracting scandals in recent years. The New Mexico state House and state Senate recently passed different bills barring contributions by contractors. Forcing Contractors to Prove Privatization is Cost-Effective: Over a decade ago, Massachusetts passed a law prohibiting private contracting of government services unless private companies prove they can perform those functions more efficiently than government workers � an automatic check on corruption that multiple studies found saved Massachusetts from the typical bilking suffered by other states privatizing public services under the pressure of corporate lobbying. A number of other states have more limited restrictions on privatization of various services. Tightening Contracting Standards: Where private companies do perform public functions, the tighter the standards for the bidding process, the less likely incompetent or corrupt companies will get public money in exchange for campaign contributions. Vendor-performance requirements help protect taxpayers from being ripped off, while prevailing or living wage laws and responsible contractor laws screen out shady employers who cut corners on public services. New Jersey and Arizona have flatly prohibited companies that offshore jobs from bidding on their state contracts.

Other Resource Organizations:

• Public Citizen
• AFSCME
• Good Jobs First